This Presentation is uses information from PMBOK Guide 2000

1. Project ManagementRisk Management* Dr. Lotfi Gaafar This Presentation is uses information from PMBOK Guide 2000 Gaafar 2007 / 1

2. Project risk management is the art and science of identifying, assigning, and responding to risk throughout the life of a project and in the best interests of meeting project objectives Risk management is often overlooked on projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates KPMG study found that 55 percent of runaway projects did no risk management at all The Importance of Project Risk Management Gaafar 2007 / 2

3. The goal of project risk management is to minimize potential risks while maximizing potential opportunities. Major processes include Risk management planning: deciding how to approach and plan the risk management activities for the project Risk identification: determining which risks are likely to affect a project and documenting their characteristics Qualitative risk analysis: characterizing and analyzing risks and prioritizing their effects on project objectives Quantitative risk analysis: measuring the probability and consequences of risks Risk response planning: taking steps to enhance opportunities and reduce threats to meeting project objectives Risk monitoring and control: monitoring known risks, identifying new risks, reducing risks, and evaluating the effectiveness of risk reduction What is Project Risk Management? Gaafar 2007 / 3

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6. Responsibility Objectives Risk Identification Risk Quantification Risk Response Risk Control Disaster Recovery Planning Forming a Risk Management Plan Gaafar 2007 / 6

7. Analyzing historical records Structured questionnaires Structured interviews Brainstorming Structured checklists Flow charts Judgement based on knowledge and experience System analysis Scenario analysis Risk Identification Gaafar 2007 / 7

8. Assess the likelihood and impact of identified risks to determine their magnitude and priority Risk quantification tools and techniques include Probability/Impact matrixes The Top 10 Risk Item Tracking technique Expert judgment Quantitative Risk Analysis Gaafar 2007 / 8

9. Probability/Impact Matrix Gaafar 2007 / 9

10. Risk Impact Gaafar 2007 / 10

11. Top 10 Risk Item Tracking is a tool for maintaining an awareness of risk throughout the life of a project Establish a periodic review of the top 10 project risk items List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item Top 10 Risk Item Tracking Gaafar 2007 / 11

12. Example of Top 10 Risk Item Tracking Gaafar 2007 / 12

13. Eliminate Risk Reduce Risk Deflect Risk Accept Risk Risk Response Gaafar 2007 / 13

14. Cost Benefit of Reducing Risk Level of Risk Eliminate Risk Reduce Risk Deflect Risk Accept Risk Costs Gaafar 2007 / 14

15. Project Management Maturity by Industry Group and Knowledge Area Gaafar 2007 / 15

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17. Contingency plans are predefined actions that the project team will take if an identified risk event occurs Fallback plans are developed for risks that have a high impact on meeting project objectives Contingency reserve or allowances are provisions held by the project sponsor that can be used to mitigate cost or schedule risk if changes in scope or quality occur Contingency and Fallback Plans, Contingency Reserves Gaafar 2007 / 17